That was still 'canon' until 1986 - even though the scene was cut from the film (simply for pacing reasons), it is still in the novelisation, the 'Book of Alien' making-of, 'Giger's Alien' and various magazine articles from the time.
Then James Cameron came along, and came up with the alien queen, thus re-writing the life cycle (something he was fully aware of - when interviewed in 1986, he was asked about this and he replied that he felt justified, since comparatively few people would have been aware of the original cocoon scene).
Of course, that scene was officially released to the general viewing public in the 1992 special edition laserdisc, and the subsequent 'facehugger' VHS set (boy, was that an exciting day!)
Quite a few people (myself included) prefer the original concept, since it is a truly 'alien' method of procreation as opposed to the slightly more familiar egg-laying queen. Ridley Scott obviously likes it too, since he elected to reinstate the scene in his 2003 director's cut. Which kind of opens up a new can of worms, because rather than being a simple footnote or curiosity, the scene is now part of the official story!
To be honest, I don't see why both can't be equally valid - different situations demand different approaches, a lone alien will need to make eggs on its own, and once the hive is established and a queen appears they go into mass production. It's still caused a fair bit of confusion, though...
Hope that answers your question
